India has immediately banned wheat exports, citing a threat to food security, in part because the war in Ukraine and a sweltering heatwave cut production and domestic prices hit record highs.
While India is not one of the world’s top wheat exporters, given supplies are already tight, India’s ban could push global prices to new highs, hitting poor consumers in Asia and Africa particularly hard.
Agriculture ministers of the G7 industrialized nations immediately condemned India’s decision on Saturday.
“If everyone starts imposing export restrictions or closing markets, that will exacerbate the crisis,” German Agriculture Minister Cem Ozdemir told a news conference in Stuttgart.
“We call on India to assume its responsibilities as a member of the G20,” Ozdemir said.
India will still allow exports backed by issued letters of credit and to countries that require supplies “to meet their food security needs,” a New Delhi government official said on Saturday.
The ban will not be permanent and can be amended, officials said at a news conference.
The surge in global wheat prices threatens the food security of India and its neighbours and vulnerable countries, the External Trade Agency of India said in a government gazette issued on Friday.
Although India’s wheat production has not fallen sharply this year, government officials say unregulated exports have led to higher local food prices.
“We do not want the wheat trade to happen or be hoarded in an unregulated way,” Commerce Minister BVR Subrahmanyam told reporters in New Delhi.
Indian wheat prices have risen to record highs, reaching 25,000 rupees ($320) a tonne in some cash markets, well above the government’s minimum support price of 20,150 rupees ($260).
“It’s not just wheat. The general price hike has raised concerns about inflation and that’s why the government has had to ban wheat exports,” said another senior government official, speaking on condition of anonymity when discussing export restrictions.
“For us, it’s very prudent.”
‘The ban is shocking’
“The ban is appalling,” said a dealer at a global trading company in Mumbai.
“We expected exports to be restricted in two to three months, but the inflation figures seem to have changed the government’s mind,” the trader said.
Rising food and energy prices pushed India’s annual retail inflation near an eight-year high in April.
India’s wheat harvest has also been hit by a record heatwave, which has hampered production. In addition to the weather affecting the harvest, India’s massive wheat stocks — a buffer against famine — have been strained by the distribution of free grains to some 800 million people during the COVID-19 pandemic.
India’s decision comes as global agricultural markets are under severe pressure due to Russia’s invasion of Ukraine.
With shipments to Ukraine, the traditional global granary, disrupted, Ukraine’s agriculture minister travels to Stuttgart to discuss with colleagues at the G7 how to get his produce out.
Before the Russian invasion, Ukraine was exporting 4.5 million tons of agricultural products through its ports every month — 12 percent of the planet’s wheat, 15 percent of corn and half of sunflower oil.
But with Odessa, Chernomorsk and other ports cut off from the world by Russian warships, supplies can only be transported by congested land that is far less efficient.
German Minister Ozdemir said some “20 million tonnes” of wheat were currently stored in Ukraine’s granaries and needed to be exported “urgently”, adding that the G7 “also expressed opposition to stopping exports and called for the market to remain open”.
He urged countries around the world to refrain from restrictive actions that could put further pressure on agricultural markets.